File: U.S. President Barack Obama and Vice President Joe Biden smile as they are pictured with bipartisan members of the U.S. Senate in the Oval Office of the White House in Washington, April 21, 2010.

REUTERS/Jason Reed

Barack Obama could call a world summit by the end of the year to pave the way for a Palestinian state should hoped-for peace talks bring no breakthrough in coming months.

The US President is understood to have informed European leaders of his plan to break an Israeli-Palestinian deadlock if negotiations have not borne fruit by September or October, the Israeli newspaper Haâ€™aretz cited unidentified Israeli officials as saying.

The US Secretary of State Hillary Clinton yesterday told reporters that special envoy George Mitchell would be returning to the Middle East next week, when she said that proximity talks â€“ the first since peace talks stalled in January 2008 â€“ would begin again. The planned return to the negotiating table was delayed last month after a row over Israeli plans to build new homes in East Jerusalem.

If those talks are again knocked off course, a broader summit will become more likely. The four members of the Middle East Quartet negotiating group â€“ the US, the UN, the EU and Russia â€“ would be expected to play a leading role in the summit to present a united front, the paper said. The summit would address core issues, including Jerusalem and final borders.

The bold move reflects Mr Obamaâ€™s resolve to find a solution to the decades-old conflict that has eluded his predecessors and raises the possibility that Washington might seek to impose its own settlement on the parties, a prospect viewed with hostility by Israeli politicians.

Mr Obama has placed negotiations at the forefront of his political agenda while acknowledging that a continued stalemate threatens the USâ€™s own security interests.

After months of intense US diplomacy in the region, the indirect â€œproximityâ€ talks represent the best chance of a breakthrough in the peace process.

While a final settlement has appeared tantalisingly close in the past, few Palestinians believe that a solution can be reached without outside help, and Israelis repeatedly insist they have no partner for peace.

â€œLeaving the peacemaking hostage to agreements between both sides is not a good idea,â€ said Ghassan Khatib, a spokesman for the Palestinian Authority. â€œThe international community has to play a larger role.â€

Earlier this month, the Palestinian President Mahmoud Abbas urged Mr Obama to impose a peace solution, a plea that will have worried Israeli officials, who insist that a negotiated solution between the two parties is the only way out of the impasse.

Mr Obamaâ€™s efforts to bring both sides to talks have stalled over the critical issue of Jewish settlements in Arab-dominated East Jerusalem, which Israel captured and later annexed after the Six-Day War in 1967. Palestinians covet East Jerusalem as the future capital of an independent Palestinian state.

Mr Abbas backed out of talks in early March after Israel announced plans to build 1,600 Jewish homes in East Jerusalem during a visit by the US Vice-President Joe Biden. The resulting row plunged relations between Israel and the US, its closest ally, to their lowest point in recent memory.

A US State Department official declined to confirm back-up plans for a global summit, saying: â€œPeace must be made by the parties and cannot be imposed from the outside. Our focus remains on seeing the discussions that are under way lead to formal negotiations that will address all of the complex issues.â€